RLNG sale deal with Trimmu power plant lands in red zone

ISLAMABAD: The new squabble between the Power and Petroleum divisions under one Ministry of Energy is set to appear soon as the gas sales agreement (GSA) with new RLNG power plant at Trimmu, may get delayed on account of assertion of Central Power Purchase Agency Guarantee Limited (CPPA)-G that asked for elimination of 66 percent RLNG off-take for the said power project.

The Board of Directors (BoD) of Sui Northern has approved the GSA with PLL and newly built RLNG power plant at Trimmu, but the fierce opposition by CPPA has endangered the expected agreement with the power plant at Trimmu, a senior official of Petroleum Division.

Interestingly, it is the same CPPA that had allowed the Punjab government to construct the RLNG project at Trimmu and now it is mourning today on its own decision. And it was CPPA CEO and NTDC GM planning who supported the project in public hearing arguing that there is no surplus and they need base load.

Now, under new scenario, CPPA-G this time has taken U turn and forcefully, in a letter written on November 14 to Sui Northern Managing Director copied to secretary petroleum, secretary power, DG Gas, Managing Directors PPIB Private power infrastructure board, and Pakistan LNG Limited (PLL) of which copy is also available with The News, asked for the elimination of 66 percent RLNG off-take for the said power project of 1200MW. The RLNG based power plant is being installed at Trimmu, Jhang which will be fourth one in a row. At present RLNG power plants at Haveli Bahadur Shah, Balloki, and Bhikki are operational with capacity to generate 1200MW each. This means that the four RLNG power plants in Punjab province will be able to generate over 4800MW electricity.

It is pertinent to mention that the ECC meeting has already given a go ahead for the privatisation of RLNG power plants at Haveli Bahadur Shah and Balloki with no resolution of rifts between the Power and Petroleum Division on the RLNG supply agreement with said two power plants. ECC had decided that the issue about RLNG agreement will later be decided.

The Power Division was trying from pillar to post the erase supply of minimum guaranteed 66 percent of RLNG for the said projects which are under privatisation process, but Petroleum Division is for maintaining the existing agreement arguing if it is done away with, then Sui Northern, Sui Southern and PSO and more importantly the government of Pakistan will go bankrupt as there is very much government to government agreement with Qatar for RLNG supply agreement. Petroleum Division is of the view that unless and until agreement with Qatar is reviewed the existing agreement is meant to continue.

About the CPPA letter on Trimmu RLNG power project, spokesman of Petroleum Division Additional Secretary Sher Afgan when contacted confirmed that CPPA has written a letter seeking the elimination of 66 percent RLNG off-take for Trimmu power plant. He said it is a complex issue as it is not possible to eliminate 66 percent guaranteed off-take of RLNG for Trimmu project in the presence of back to back agreements between Sui Northern, Sui Southern and PSO based on take or pay charges and agreement of PSO with Qatar Gas for fifteen years. However, he said that the meeting with the top mandarins of Power Division will be held soon to sort out this very issue.

However, CPPA in its letter written on November 14 said that existing arrangement of minimum guaranteed off-take of 66 percent under the initialed PPA of Punjab Thermal Power Limited shall only add to the financial hardships, as such, unsustainable. If such guaranteed off-take of 66 percent continues to be maintained in the PPA for Punjab thermal power plant at Trimmu as provisionally in the initialed draft of PPA, economic merit order would have frequent violations, on account of contractual commitments, resulting into the dispatch of the costly power plants and non-utilisation of the efficient generation plants.

The letter says that if CPPA signs the initialed draft with a provision of guaranteed off-take of 66 percent, it may entail a cumulative loss of approximately Rs143 billion till 2025, only for the subject project which will eventually have to be either picked up as subsidy by GoP or will increase the electricity basket price, which will eventually have negative impact on the consumers end tariff.

The News tried many times on November 19 (Tuesday) and November 20 (Wednesday) to have detailed version of Central Power Purchase Agency to make the story balanced, but Abid Lodhi, CEO of CPPA, did not respond to any call and WhatsApp. This correspondent sent a questionnaire but he did not answer even after reading the questions. The correspondent also contacted officials in CPPA office and but Lodhi, CEO CPPA, has refused to talk and answer the questions. The officials also responded saying that CEO CPPA has the prerogative not to answer the media person. They also said while quoting him that CEO wanted to know how The News has managed the CPPA letter written on November 14. However, The News sent him three questions which remained unanswered.